Daily Archives: December 7, 2009

As regular readers know, we’ve been talking about why businesses are sitting on the sidelines and not hiring at the moment. Businesses don’t like unsettled questions about the arena in which they must operate. Health care legislation will effect the cost of doing business. Until that is settled, there’s little incentive to take a chance and hire or expand their business. If it costs more to do so after the legislation is passed – and it seems it will, they’ll wait to see the eventual outcome (and cost) and adjust accordingly. Same with cap-and-trade.

Officials gather in Copenhagen this week for an international climate summit, but business leaders are focusing even more on Washington, where the Obama administration is expected as early as Monday to formally declare carbon dioxide a dangerous pollutant.

An “endangerment” finding by the Environmental Protection Agency could pave the way for the government to require businesses that emit carbon dioxide and five other greenhouse gases to make costly changes in machinery to reduce emissions — even if Congress doesn’t pass pending climate-change legislation. EPA action to regulate emissions could affect the U.S. economy more directly, and more quickly, than any global deal inked in the Danish capital, where no binding agreement is expected.

Bottom line – if the administration can’t get it done legislatively, they’ll just assume the authority and implement what they wish to do to restrict emissions and require “changes in machinery” unilaterally.

An EPA endangerment finding “could result in a top-down command-and-control regime that will choke off growth by adding new mandates to virtually every major construction and renovation project,” U.S. Chamber of Commerce President Thomas Donohue said in a statement. “The devil will be in the details, and we look forward to working with the government to ensure we don’t stifle our economic recovery,” he said, noting that the group supports federal legislation.

Can you imagine a more pervasive “emission” or arbitrarily applied set of mandates? Start asking yourself who the favored and unfavored industries are out there? Do you suppose coal fired power plants might be target one? And I’d guess that refiners would be in the same boat – unless they make ethanol.

The point of course is this is a perfect way to target and increase the cost of operating businesses that the EPA decides are the worst CO2 polluters. They’ll just write regulations that require costly renovations and changes. The net outcome, of course, is increased cost to consumers – most likely in their electricity bills, the cost of goods (transportation) and just about every other aspect of life you can imagine.

An endangerment finding would allow the EPA to use the federal Clean Air Act to regulate carbon-dioxide emissions, which are produced whenever fossil fuel is burned. Under that law, the EPA could require emitters of as little as 250 tons of carbon dioxide per year to install new technology to curb their emissions starting as soon as 2012.

The EPA has said it will only require permits from big emitters — facilities that put out 25,000 tons of carbon dioxide a year. But that effort to tailor the regulations to avoid slamming small businesses with new costs is expected to be challenged in court.

Legislators are aware that polls show the public appetite for action that would raise energy prices to protect the environment has fallen precipitously amid the recession.

Understanding that the public appetite for such action is very low, legislators are perfectly happy to let cap-and-trade languish. So the bureaucracy is being empowered to go where no elected politician dares at the moment. And if you’re a business, that means you’re still not clear what that means to you at the moment.

And so, you don’t hire. You don’t expand. You’re barely competitive in the global market as it is and now they’re talking about adding more cost? Yeah, that settles everything, doesn’t it? They’ll start hiring tomorrow.

In a London preview of Wall Street’s bonus nightmare, more than 1,000 investment bankers have quit Royal Bank of Scotland to work at rivals due to curbs on their paychecks, according to people familiar with the situation.

In the UK, the rules are modeled after US actions to curb pay at firms bailed out by the government.

[…]

The protest exodus at RBS — first reported on the Web edition of the Times of London — involved less than 5 percent of its banking professionals.

Some headhunters see more bankers jumping ship in the coming year as the controversy deepens over pay freezes and curbs.

Pay people less than they think they can earn elsewhere, then “elsewhere” is where you will find them.

Some will say that these ship-jumpers can’t be worth too much if their companies had to be bailed out, but that gets it exactly backwards. For the most part, it’s those who are responsible for the floundering that will be left working for the rotting (and now government owned) corpse, while those most capable find positions in more stable firms.

There’s nothing particularly bad about this sort of slough off, except that with the bailouts thrown into the mix, it’s the public that’s left holding the bag. Absent the government takeovers, the same sort of thing would have happened, only in a quicker, more orderly way (see, e.g. the fallout from the collapse of Arthur Anderson, or the bankruptcy of BearingPoint).

Moreover, the demonization of Wall Street types accomplishes nothing constructive, and may very well convince otherwise enterprising young B-school grads (or potential grads) to employ their intellectual talents in other fields that may not fully capture their potential or interest. All that does is deprive the rest of us of smart, young and industrious business people who might make our world better, and instead treats us to a glut of some other professionals that we likely don’t need (i.e. lawyers). And we really don’t want that now, do we?

This editorial calling for action from world leaders on climate change is published today by 56 newspapers around the world in 20 languages.

And, as you might imagine, it is an editorial unwritten by any of them. Of course we all know papers routinely give over editorial space for guess editorialists. But this goes beyond that to pure propaganda. And, as you read the editorial, it completely ignores the scientific scandal now growing ever larger and more serious, to declare the “facts are clear” and that the world needs to take “steps to limit temperature rises to 2C.

I’m reminded of how well our steps to limit unemployment by blowing 787 billion we didn’t have worked in a complex economy which apparently those who claim to know about seemingly didn’t. You can imagine my skepticism (and those of many others like me) concerning the assertion we can change anything (much less have an effect) on anything as complex as a global climate.

Yet these 56 newspapers uncritically reprint this editorial (to include the Miami Herald).

In reality, I’ve come to understand this isn’t about “climate change”, this is about the politics of income redistribution. I’ve spoken of it in the past. This has been a goal of the third-world debating club, also known as the UN, since it has come into existence. The IPCC is just a convenient vehicle on which to base their claims and put them forward to the industrialized countries for fulfillment. The underlying “science”, like a wet paper box, is coming apart at the seams. And not a single mention in the editorial. But it becomes clear, the further you get into it, that it is about what I contend it is about:

Social justice demands that the industrialised world digs deep into its pockets and pledges cash to help poorer countries adapt to climate change, and clean technologies to enable them to grow economically without growing their emissions. The architecture of a future treaty must also be pinned down – with rigorous multilateral monitoring, fair rewards for protecting forests, and the credible assessment of “exported emissions” so that the burden can eventually be more equitably shared between those who produce polluting products and those who consume them. And fairness requires that the burden placed on individual developed countries should take into account their ability to bear it; for instance newer EU members, often much poorer than “old Europe”, must not suffer more than their richer partners.

If you were playing buzz word bingo with this paragraph you’d be at the prize table right now picking one out. It hits all of the favorite themes of income redistributionists. And its blatancy should scare you. This is about your wallet, your money and the rest of the world making a claim on it. This is the third world’s dream come true.

In Copenhagen these next two weeks, our “leaders” will attempt to find a way to accommodate those who are making this claim on your money. What they won’t do is question the “science”. They won’t ask how CO2, which science has told us is an 800 year lagging indicator and an effect of warming suddenly became a cause of warming. They won’t question why the models that predict our environmental Armageddon can’t duplicate the past and have been totally wrong about the last 10 years. Or why those models don’t take into account the effect of the sun, solar wind, cosmic rays or cloud albedo – all things which heavily effect our global climate.

Instead they plan on doing what has been in the works for decades – use this as an excuse to loot the riches of the more industrialized world. The 56 tools of that movement who’ve uncritically reprinted this editorial call the Copenhagen meeting “14 days to seal history’s judgment on this generation” and conclude:

It is in that spirit that 56 newspapers from around the world have united behind this editorial. If we, with such different national and political perspectives, can agree on what must be done then surely our leaders can too.

The politicians in Copenhagen have the power to shape history’s judgment on this generation: one that saw a challenge and rose to it, or one so stupid that we saw calamity coming but did nothing to avert it. We implore them to make the right choice.

I go with “stupid” in this case. Unfortunately the real “stupid” thing to do would be to rush into something using unproven, or even untested science, as the basis for the action – but that’s precisely what the plans are for Copenhagen. And we’ve seen this before. Kyoto was simply a less ambitious attempt than Copenhagen. And we “stupidly” sat it out. Temperatures have cooled since.

So my hope is we stupidly do that again. I’ll be glad to suffer the brickbats from the alarmists and the redistributionists. But until we have real science which is transparent, open and actually tested, I’m not willing to consider letting anyone near my wallet and my freedoms. And that’s what our politicians need to know – loud and clear.